Bigger Than Enron

Bigger Than Enron

2002, Economics  -   24 Comments
Ratings: 7.73/10 from 22 users.

Bigger Than EnronOn June 15, a Houston jury convicted Arthur Andersen — the 89-year-old accounting firm once known as the gold standard of integrity in auditing — for obstruction of justice in the government’s investigation of Enron, Andersen’s biggest client. With the demise of Andersen, the American business landscape was forever altered. But something else was altered as well: the scandal surrounding Enron and Andersen, together with the wave of other major accounting scandals that have come to light in recent months, has dealt America’s markets an unsettling psychological blow. If we can't trust the auditors, investors wonder, whom can we trust?

The meteoric rise and stunning collapse of Enron caused many to question why the corporate oversight system that was supposed to protect investors failed to sound any alarms about the company’s dubious finances. But Enron and Arthur Andersen turn out to be merely the tip of the iceberg. In the 1990s, more than 700 U.S. companies were forced to correct misleading financial statements as a result of accounting failures, lapses, or outright fraud. Together with Enron — the largest corporate bankruptcy in U.S. history — these failures have cost investors an estimated $200 billion.

Enron’s collapse in late 2001 galvanized Congress and brought urgent calls for reform. The House and Senate held hearings and introduced legislation to reform the accounting industry. But so far no bill has passed both chambers and been signed into law. Instead, after prolonged criticism for moving too slowly and being too soft on the accounting firms, SEC Chairman Harvey Pitt has taken the initiative, announcing on June 20 his proposal for a new Public Accountability Board. Critics, however, still say that his plans are too weak, and question whether he is genuinely prepared to cross his former clients in the accounting industry, which he represented as a top Wall Street lawyer throughout the 1990s.

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5 years ago

Did any Arthur Anderson Associate spend a single day in US jail? Did a NY Jewish Banker even appear in a US Court? Any Lehman Bros employees convicted & jailed?
A few Enron associates were convicted; but one conveniently died & the other only served a few months in Jail.

10 years ago

why is it always liberal propaganda? the facts are right there it's not propaganda it's people trying to bring forth the truth for a better moral world. if you don't believe something don't just blame it on liberals or conservatives. grow up

10 years ago

What are the 5 watch dog groups mentioned in the video?

10 years ago

If capitalism is going to survive, it must do two things: must allow itself to hybridize and revitalize its responsiveness to a vibrant middle class and will not attract fresh, educated young imaginations to future careers rife with financial abuse and self-aggrandizement. This problem must be responded to severely, as a crime with zero-tolerance, for it is equivalent to societal "class rape" as sure as any fratboy with some Rohypnol and bad intentions can be guilty of date rape.

I foresee a future with a solidly interdependent global economy that is well-managed, regulated and that strikes a balance between private and public ownership of both the resources and means of production.

11 years ago

C'mon people - stop being such gullible SAPS! They teach us from the day we are born to "shut up and obey" - to TRUST ADULTS! We are never to question authority and when we grow-up the lesson is "do as you are told and pay your taxes". I spent 15 years as a bankruptcy examiner in PA working for people just like these. Nobody is interested in a solution because money is in the hands of the insane. The "monumental screw-ups" are inconsequential when the revenues to "fill the gaps" are UNLIMITED.

11 years ago

Whose is that guy at the top of the column ? He looks like Dermot Desmond who is a big time financier here in Ireland so what is he doing at top of this piece ?

Brandon Schultz
11 years ago

Dude in the photo looks like an evil John Cleese

11 years ago

Petars comments below sum up our stupidity perfectly.
According to Petar:
"this is bullshit, i believe it but in the end its liberal propaganda."
So Petar is saying:
1. Its bullshit
2. but yet Petar believes this bullshit
3. But it doesnt matter what bullshit Petar believes because its 'liberal propaganda'

In one line Petar has summed up the the entire reason we accept corruption and why we always will.
We're so busy looking left and right to see what the 'other' side is doing, we cant see whats right in front of us. As Petar so brilliantly summed it up, we dont even believe the things we know are true.

11 years ago

Im not so sure its bigget than enron, but is shocking to say the least!

shows how corrupt the USA is, how can these guys get away with this kind of thing ?

11 years ago

Your still a little boy Petar. If you don't know the difference between an argument and an assertion, and a fact and an opinion, then go back to your playpen until you can run with the big dogs.

12 years ago

this is bullshit, i believe it but in the end its liberal propaganda. people need to realize capitalism is awesome, but corruption ruins it every time. Its the corruption and Bureaucratic people that run this country we should be attacking. Thats why I cant stand when people attack the Tea Party, Why? Are they scared that the citizens of America arent fit to run their country? Who were our forefathers when they started this country? just like like us. Grow up people, MTV and hip Obama will run you into the ground so far we will be trading jewelry for food.

12 years ago

And the ball keeps rolling up hill in Shhht...

13 years ago

Watch "Frontline: The Warning"

Watch "Part 2/2: Bill Murphy of GATA reveals whistle blower Andrew MaGuire to CFTC 3-25-2010"

Keep your eyes out on WikiLeaks -- they will be releasing some internal bank documents soon.

You can google both.

13 years ago

Very, Very Good Documentary.
This is corruption, forget countries like Africa, South America in comparison it's a joke and besides Arthur Andersen conviction was overturned.

Some Guy
13 years ago

Arthur Andersen was NEVER known as the "gold standard of integrity" in accounting. When they were of of the Big Eight (then the Big Six), they were always known as the dodgy ones who cared more about how many hours they billed than whether they were doing the job they were supposed to do.

When AA got caught cooking Enron's books, people all over the industry wondered why it had taken so long.